Tennova to sell Jamestown hospital to Rennova, company now operating hospital in Scott Co.

Tennova Healthcare on Tuesday said it is no longer planning to build a new flagship hospital on Middlebrook Pike in West Knoxville. The hospital system instead announced a new strategic plan to "reconfigure" services at its three existing Knoxville hospitals — Physicians Regional Medical Center in North Knoxville, Tennova North Medical Center in Powell, and Tennova Turkey Creek Medical Center in West Knoxville — and develop new outpatient centers in the Knoxville area. “Given the changes in the heath-care industry, building a new hospital is unnecessary and would not be prudent for our health system and the Knoxville community.”
Angela Gosnell/News Sentinel

Rennova Health Inc. has announced it intends to purchase Tennova Healthcare-Jamestown hospital this year.(Photo: Submitted/Tennova Healthcare)

The purchase, expected to close in the second quarter of this year, includes about eight acres of land and the 90,000-square-foot, 85-bed hospital, which has a 24-hour emergency department, surgical center, radiology department and wound-care center with two hyperbaric oxygen chambers.

This will be the second hospital for West Palm Beach, Fla.-based Rennova, which provides diagnostic and support software for billing, record management and lab services to health-care providers. In 2016, the company bought the former Scott County Hospital in Oneida from Mississippi-based Pioneer Health Services Inc., which had filed for Chapter 11 bankruptcy and had closed the acute-care hospital in July 2016.

A federal court approved Rennova's purchase of the hospital, which had been renamed Pioneer Community Hospital of Scott. Pioneer had reopened the hospital in December 2013 after it had closed in May 2012 when its contract with Knoxville-based Tennova Healthcare, formerly St. Mary's and then Mercy Health, ran out. Rennova agreed to pay up to $450,000 of the debt still owed by Pioneer Health Services of Oneida, which also owed around $500,000 in back taxes.

Rennova reopened the hospital in August 2017, renaming it Big South Fork Medical Center after a community contest. The company recently announced it will soon add MRI diagnostics and expand other services.

The acquisition of the Jamestown hospital "further demonstrates our commitment to expanding Rennova's rural hospital model to provide necessary services to patients while securing more predictable recurring revenues," said Rennova CEO Seamus Lagan. "This hospital is approximately 38 miles — less than a one-hour drive — from our current hospital in Oneida and will benefit by receiving patients from Oneida (who) require operations and treatment not provided there."

Last week, the NASDAQ reported removing Rennova Health from the stock exchange listing. The NASDAQ had suspended the shares of Rennova last year after it repeatedly didn't meet the exchange's listing requirements — staying above $1 a share, for instance. This week, the company's market cap — the total market value of its equity —was $112,793.

Meanwhile, since 2016, Tennova parent company CHS has been selling off assets, including at least 30 hospitals as well as majority interest in its home-health company, to pay down some of its $14.7 billion in debt — much of that a result of acquiring the for-profit hospital chain Health Management Associates in 2014. After that acquisition, CHS was the country's largest for-profit hospital chain, with more than 200 hospitals in both rural and urban communities in multiple states.

Last week, Tennova announced it will no longer build a new "flagship" hospital in West Knoxville and will instead transfer many services to its newer Tennova Turkey Creek and Tennova North facilities and will keep only a limited number of services at Physicians Regional Medical Center in North Knoxville, which will cease to be an acute-care hospital.